JUDGMENT
P.K. Shamsudhin, J.
1. Defendant in O.S. No. 504 of 1982 on the file of the Sub Court, Kottayam is the appellant. Suit is for realisation of money under two Insurance Policies. The Court below passed a decree in favour of plaintiff for realisation of amounts covered by Ext. B 10 and B 13 policies, amounting to Rs. 75, 000/- with its bonus upto the date of death of the insured, together with interest till date of payment.
2. Plaintiff is the widow of one Punnan Kuruvilla, who was the proprietor of Everest Umbrella Mart, Kottayam. He died on 6.8.1981. He had taken an anticipated Endowment Assurance Policy No. 40965943 with the defendant Insurance Corporation for a sum of Rs. 40, 000/- for 15 years. He paid premium for the Policy for 6 years till his death. Plaintiff was nominated in the said Policy by deceased Punnan Kuruvilla. The first 20% anticipated amount of Rs. 8, 000/- was due on 17.10.1980 and was received by the assured. Irrespective of the amount received, the deceased was entitled to receive the whole sum of Rs. 40, 000/- assured under the Policy with bonus amounting to Rs. 5, 824/-. Accordingly, total amount of Rs. 45, 824/- became payable to plaintiff on the death of the assured. Punnan Kuruvilla had also taken another Policy with the defendant, under Policy No. 41206371 on 14.11.1980 for Rs. 35, 000/-. 20% of the said amount being payable on every 4 years. Plaintiff was the nominee in that Policy also. An amount of Rs. 35, 000/- also became payable to the nominee on the death of Punnan Kuruvilla in respect of that Policy. Inspite of demands made by plaintiff, defendant did not pay the amount. This, in short, is the plaintiffs case.
3. In the written statement, defendant contended that though it was true that Punnan Kuruvilla gave a proposal to insure him for Rs. 40, 000/- on 15.9.197 5 and issued him Policy No. 40965943, the policy lapsed due to non-payment of premium on 17.4.1979. Deceased applied for revival of policy and submitted a personal statement regarding health on 17.3.1.980. On the basis of the statements, declaration and answers given by the deceased and believing them to be true, the defendant revived the policy. On the basis of the answers given in the proposal statement for the other policy and based oh the declaration contained, the defendant insured the deceased under Policy No. 41206371 on 20.5.1981 commencing from 14.11.80. The nomination of the plaintiff is admitted. Since the claim arose within a short period, defendant conducted investigation and it was revealed that Punnan Kuruvilla was suffering from diabetes even prior to the proposal made on 15.9.1975 and that he used to consume alcohol. The assured had given false answers to vital questions regarding his health in the personal statement in the proposal forms and revival application. As the particulars furnished therein are found incorrect, the contract became null and void and the amounts already paid stood forfeited to the Corporation. The claim was repudiated based on the above allegations.
4. On a consideration of the evidence in the case, the Court below found that it has not been established that the assured had suppressed material facts by making false statements regarding his health and that therefore Exts. B10 and B13 are valied policies. In that view of the matter, the Court below passed a decree in favour of plaintiff as prayed for.
5. In this appeal, learned Counsel for appellant has challenged the finding of the Court below. Before dealing with the contentions raised by learned Counsel on both sides, it would be profitable to refer to Section 45 of the Insurance Act, 1932 (hereinafter referred to as ‘the Act’ for short) in so far as it is relevant to this case:
No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy holder and that the policy holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.
In regard to first policy, learned Counsel for appellant submitted that two years have not elapsed from revival of policy and that therefore even in regard to that policy, bar contained in Section 45 does not apply. Alternatively, he also contended that this is a case which falls outside the purview of first part of Section 45, in as much as conditions for the application of second part are satisfied in this case. Three conditions emumerated in the second part of the Section are: (a) the statement must be on a material matter or suppress facts which it was material to disclose; (b) the suppression must be fraudulently made by the policy holder; and (c) the policy holder must have known that it was false or that it suppressed facts which it was material to disclose.
6. It is not possible to accept the first submission of learned Counsel for appellant that since revival is within two years, the case will not fall under Section 45 of the Act and that it would be open to the insurer to cell the policy in question on the ground that the statement made in the proposal for insurance or in any report of a medical officer or referee or friend of the insured or in any document leading to the issue of the policy was inaccurate in view of the authoritative pronouncement of the Supreme Court in Mithoolal Bayak v. Life Insurance Corporation . In that decision, Supreme Court held that it is clear from the wording of Section 45 that the period of two years had to be calculated from the date on which the policy was originally effected. If follows that in regard to the first policy. Defendant can succeed only if it is shown that all the three conditions mentioned in the second part of Section 45 are satisfied.
7. That takes me to the question whether the alleged suppression of the fact that the policy holder was a diabetic patient or was in the habit of consuming alcohol at the time when the statement relating to the first policy was made was a material matter and even so, the suppression was fraudulent and whether the policy holder must have known at the time of making the statement that it was false or that the statement suppressed facts which was material to disclose. No details of the statement relating to the first policy were made available so as to ascertain whether the conditions stated in the second part of Section 45 are satisfied. In the circumstances, I am of the view that the defendant cannot call in question the first policy in view of the first part of Section 45 of the Act as more than two years have elapsed after the commencement of the first policy.
8. As far as the second policy is concerned, the death occured before the expiry of two years and the policy was called in question and it would be open to the defendant to show that the statement in the proposal form was inaccurate on material matters vitiating the contract.
9. Ext. B13 in the second policy (No. 41206371) for an amount of Rs. 35, 000/-. Ext. B2 in the proposal form dated 28.10.80. Ext. B1 in the medical report dated 28-10-80. It is on the basis of the medical report and particulars contained in proposal form Ext. B13 was issued on 20.5.1981 with effect from 14.11.1980. Ext. B17 in the letter sent by the Divisional Manager, L.I.C., repudiating the claim. The reason stated in Ext. B17 for repudiating the claim. The reason stated in Ext. B17 for repudiation is that the deceased with held correct information regarding his health at the time of effecting the assurance. It was further stated that in the proposal form for assurance dated 28.10.1990, to question No. 19, namely, “have you been suspected of diabetes or are you suffering from diabetes or have ever passed sugar, albumin, pus or blood in urine?” The answer given was “No”. It was further stated that all these answers were false and that the defendant possessed of indisputable proof to show that from about six years before the proposal for the above policy, the insured had been suffering from diabetes.
10. Learned Counsel for appellant submitted that there is clear evidence to show that the appellant was suffering from diabetes as aforesaid and in view of suppression of this fact and misrepresentation in Ext. B2 proposal form that the policy holder was not suffering from diabetes, it is open to the defendant to repudiate the claim. learned Counsel heavily relied on Ext. XI file containing treatment records of Punnan Kuruvilla maintained in the Medical College Hospital, Kottayam. Ext. B3 is the certificate issued by DW 2 Dr. Vilasini, Associated Professor of Medicine, Medical College Hospital, Kottayam. It is stated therein that the deceased was a-diabetic patient for the last seven years and that the deceased was admitted to the hospital on 22.6.1981. DW 2 stated that it was she who was attending on Punnan Kuruvilla while he was in the Hospital on 22.6.1981. He also stated that at page 12 of Ext. XI, she had written investigation report. She has also noted blood sugar. In cross examination DW 2 stated hat Ext. B3 was issued on the basis of Ext. XI case sheet where in there is entry Ext XI (c) to the effect that the patient is a known diabetic since seven years. She stated that Ext. XI (c) entry was made by a House Surgeon attached to the Medical’College Hospital, Kottayam. She further stated in cross examination that but for the entry in Ext. XI (c), she would not have stated in Ext. B3 that Punnan Kuruvilla was a known diabetic patient since 7 years. learned Counsel for respondent submitted that the House Surgeon who made the entry was not examined and that therefore Ext. XI (c) or Ext. B3 cannot be relied on to. hold that the insured was suffering from diabetes.
11. Ext. B4 is a certificate dated 3.4.1982 issued by Dr. K.P. George, Associated Professor of Medicine attached to the Medical College Hospital, Kottayam, who was examined as DW 3.That also shows that Punnan Kuruvilla was a known diabetic for a seven years. In his evidence as Dl, 3, 3, stated that he examined Punnan Kuruvilla during the period from 22.6.1981 to 4.1.1981 while he was in-patient in the Medical College Hospital. DW 3 proved Ext. B4 and stated that he has stated in the certificate that Punnan Kuruvilla is known diabetic patient for 7 years. He further state that the the history and the disease are reported by the patient himself. He stated that the writing at page 3 must be by House Surgeon, that at page 11 of Ext. XI, it is written that the patient is a known diabetic for 7 years, that known diabetic means that the patient known that he is a diabetic or at least patient must have been told so by doctor who treated him and that blood sugar under control meanrsugar under medicine. He also stated that Ext. XI (c) is written by House Surgeon attached to him and that signature on page 13 of Ext. XI is his signature. He stated that patient was treated for diabetic also, and that treatment is given on the basis of the case sheet and laboratory test.
12. learned Counsel for respondent submitted that though DW 3 in his chief examination stated that the case sheet was written by the House Surgeon attached to him, in the cross examination, he admitted that he did not know in whose handwriting Ext. XI (c) was written. The lower Court held that neither DW 2 nor DW 3 was able to assign the authorship of Ext. XI (c) to any particular doctor and therefore the evidence of DW 2 or DW 3 could not be acted upon.
13. I am unable to accept this contention of learned Counsel for respondent. Ext. XI is a case sheet maintained by the Medical College Hospital, Kottayam in respect of Punnan Kuruvilla, who was admitted to the Medical College Hospital on 22.6.. 1981 and was an in-patient in the hospital till 4.7.1981. The genuineness of the case sheet has not been challenged. Neither D W 2 nor DW 3 had any axe to grind against the plaintiff or any special interest in the Life Insurance Corporation. Nor is the circumstance that the particular House Surgeon who made entries was not examined will render the evidence and Ext. XI case sheet valueless. I do not find any reason to say that entry in the case sheet than Punnan Kuruvilla is a known diabetic patient for 7 years is incorrect. DW 2 and DW 3 are most disinterested witnesses and I do not find any reason to reject their evidence, or the entries in Ext. XI as incorrect.
14. DW 6 is the Neuro Surgeon attached to the Christian Medical College, Velloor. He gave evidence that Punnan Kuruviila was treated in the Christian Medical College, Velloor and the file relating to his case sheet is Ext. X2. He deposed that Dr. Jacob Abraham was working in the hospital in the same department and he treated Punnan Kuruvilla. He also stated that he knew the handwriting and signature of Dr. Jacob Abraham and Ext. 66 in the certificate issued by Dr. Jacob Abraham. He.testified that Punnan Kuruvilla was a diabetic patient for the last seven years and that it is written in the case sheet and the yellow sheet is Ext. XII (a). In Ext. XII (a), it is seen written “known diabetic since 1974, but not taking any medicine”. In reply to a question as to who reported this to the doctor, he replied that the patient himself. He also stated that he had seen the patient and was able to talk to him. According to him, the patient was treated at the hospital for diabetic disease, and that it has been recorded in Ext. XII. He further stated that Ext. B6 also would show that Punnan Kuruvilla was a diabetic patient. He stated that Ext. XII contains his handwriting and signature and Ext. XII is truly and correctly maintained by the Hospital. In the doctor’s order sheet, witness prescribed medicine for the patient and Ext. XII (b) is the prescription. The patient died at the hospital on 6.8.1981. He stated that Ext. B7 is the another certificate which was issued by Dr. Jacob Abraham and in that certificate, the second cause of death is shown as diabetic mellitus. learned Counsel for respondent pointed out that DW 6 admitted that diabetic mellitus has not contributed to the death of the patient, as it was well controlled. Ext. B7 was issued by Dr. Jacob Abraham who is Professor of Neuro Surgery, while DW 6 was Associated Professor of Neuro Surgery. That DW 6 considered that diabetic is not the secondary cause of death is not very material, since DW 6 was very definite that the patient was suffering from diabetes. DW 6 stated that patient had diabetic complication.
15. Ext. B8 in the death certificate issued from Christian Medical College, Velloor, in respect of Punnan Kuruvilla. That was issued by Dr. Jacob Abraham. In the column relating to diagnosis, diabetes mellitus also stated. In the course of cross examination DW 6 stated that the marginal writing is not in his handwriting and that it is written by one of the junior doctors, who is not now in service.
16. Learned Counsel for the respondent heavily relied on the evidence of D.Ws. 1 and 4 and also Exts. B1, B2 and B5. DW 1 is the Assistant Surgeon, who is the authorised medical attendant attached to the L.I.C. He examined late Punnan Kuruvilla and issued Ext. B1 confidential report and also signed Ext. B1 proposal form. He stated that he put the questions in Ext. B1 to late Punnan Kuruvilla and recorded the answers given by the insured. According to him, he conducted all the tests as required in B1 form and found the health of the insured to be first clause. DW 4 is a Civil Surgeon, who is the authorised medical attendant to the L.I.C. of India, who examined Kuruvilla on 17.3.1980 and issued Ext. B5 confidential medical certificate. According to him, he also conducted all the tests mentioned in Ext. B5 form and the examination revealed absence of sugar in the urine of the insured and accordingly, he reported that the insured’s health was first class. On the basis of these documents and evidence it was argued by learned Counsel for plaintiff that the insured had first class health and he did not suffer from any diabetic complaint.
17. In view of the evidence furnished by D.Ws. 2, 3 and 6 and Exts. XI and XII, I do not find any reason to held that Punnan Kuruvilla was not a diabetic patient. Both Dw 1 and DW 4 have stated that if diabetes is controlled by medicine, it would not have been possible to detect whether a person was a diabetic patient. In the circumstances, it will not be possible to held on the basis of Exts. B1 and B2 or Ext. BS that Punnan Kuruvilla was not a diabetic patient. It follows that the insured has suppressed the fact that he is a diabetic patient when answers to questionnaire in Ext. B1 proposal form for the 2nd insurance policy were made. Since the 2nd policy came into effect, only within two years of the death of Punnan Kuruvilla, protection contained in 1st part of Section 45 was not available and if the statements made by policy holder were inaccurate or false, the policy can be called in question.
18. This Court had occassion to consider the nature of contract of insurance in Abubacker v. L.I.C. of India 1983 KLT 492.
This Court observed as follows:
Contracts of insurance fell within the category of “uberrimaefidel” contracts (a term which is convenient though not strictly accurate: Scaton v. Heath, (1899) I.Q.B. 782, 792. In such contracts as one party is in a very strong position to know the material facts and the other party is in a very weak position to discover them, the former us under a duty not only to abstain from making false representations of material facts, but also to disclose, in the utmost good faith, such material facts as are within his knowledge to the other party.
The Division Bench quoted with approval the following passage in Carter v. Bochem (1766) 3 Sum (1905):
Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the under writer trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist. The keeping back of such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void; because the risque run is really different from the risque understood and intended to be run. At the time of agreement. The policy would be equally void against the underwriter if he concealed. Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary.
Mac Gillivray & Parkington on Insurance Law, Eighth Edition, thus summarises the assured’s duty in para 637,
The assured must disclose to the insurer all facts material to an insurer’s appraisal of the risk which are known or deemed to be known to the assured, but not known or deemed to be known to the insurer.
The same work proceeds to state as follows:
643. Innocent omissions: If a fact is material and within the knowledge of the assured or his agent, the assured is under an absolute duty to disclose it. There is a long line of decisions from Lord Mansfield’s Judgment in Carter v. Beehm (1) itself where it has been said that an insurer can avoid the insurance.
(1) (1766) 3 Burr. 1905, 1909.
in the absence of fraudulent intent on the part of the assured. (2) Mistake or forget-fulness affords no defence. “It is well-established law”, said Cockburn C.J. in Bates v. Hewitt, (3) “that it is immaterial whether the commission to communicate a material fact arises from indifference or a mistake or from it not being present to the mind of the assured that the fact was one which it was material to make known.
Any fact which influences the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk is a material fact. In para 602, the author says.
602. Materiality. If the policy contains a recital that the proposal therein referred to shall be the basis of the contract, the truth of the statements contained in the proposal is thereby made a condition of the liability of the insurers, and any inaccurate answer will entitle the insurers to repudiate liability apart from any question of materiality. (1) The rules concerning warranties in insurance law then govern
(2) Macdowell v. Fraser (1779) 1 Doug. 260.
(3) (1867) L.R.2Q.B. 595, 607.
(4) Thomson v. Weems (1884) 9 App. Cas. 671.
any misstatement. In the case of an ordinary misrepresentation, however, or if the insurers are limited by contractual terms to avoiding the policy only in cases of material omissions or misrepresentation, then in order to repudiate liability under the policy they must show that the misstatement concerned material facts.
In Pollock & Mulla’s Indian Contract Act and Specific Relief Acts, 10th Edition at Page 98, ‘Material fact’ has been defined as “Any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact, but the withdrawal of a proposal of insurance with another insurer is not such a material fact (5) In a contract of insurance, utmost good faith is essential, i.e. the insured is expected to answer various questions and give true and faithful information. If the insured has knowledge of a fact which others cannot ordinarily have, then he should not indulge himself in suppressio veri, suggestiofalsi by making a suggestion which is false”.
(5) Benarsi Debi v. New India Assurance Co. 1959 AP 540.
Again at page 183, the learned Author says:
Apart from fiduciary relationships contracts of partnership, contracts of insurance are the leading instances of contracts expressed by the law to be contracts of the utmost faith where material facts must be disclosed; if not the contract is voidable. (6) Contracts such as contracts of marine, fire and life are examples where uberrims fides is to be shown by persons obtaining them. In each of them the person desiring to be insured must, in setting forth the risk to be insured against, not conceal any material fact affecting the risk known to him (7)…In a contract of insurance, any fact which materially influences the making or not making a contract or determining whether to accept or not to accept the risk at ordinary rates of premum is a material fact which has to be correctly stated. (8)…A proposer is not only required to state all matters within his knowledge which he believes to be material to the question of insurance but also all which in point of fact are so. (9) Suppression of material facts when making a proposal for insurance by one having knowledge or belief of the fact would fall under Section 17 of the Contract Act and the policy issued would be vitiated thereby (10)
(6) Bell v. Lever Brothers Ltd. (1932) A.C. 161.
e.g. case of suppression of the fact that the policy holder for a serious disease.
In the General Principles of Insurance Law by E.R. Hardy Ivamy, 5th Edition, Tests of Materiality has been discussed. The author says:
The test which is usually adopted is whether the non-disclosure of the facts would influence a ‘prudent’ insurer (though in some cases the term ‘reasonable’ has been substituted for ‘prudent’) Another test is whether a ‘reasonable’ assured would consider them material. In no case is it relevant to consider whether the non-disclosure would influence the particular insurer concerned or whether the assured himself thought that the facts were material.
The author proceeds to state as follows:
What is material is that which would influence the mind of a prudent insurer in deciding whether to accept the risk of fix the premiurn, and if this be proved it is not necessary further to
(7) Scaton v. Heath (1899) 1 O.B. 782, 792-3.
(8) Docker & Woolf Ltd. v. Western Australia Insurance Co. (1906) I.K.B. 408, 415.
(9) Daglish v, Jarvie, 201.J. Ch. 475.
(10) Mithoolal v. Life Insurance Corporation of India (1962) A.SC. 814.
Prove that the mind of the actual insurer was so affected. In other words, the assured could not rebut the claim to avoid the policy because of a material representation by a plea that the particular insurer concerned was so stupid, ignorant, or reckless, that he could not exercise the judgment of a prudent insurer and was in fact unaffected by anything the assured has represented or concealed”. (11)
It is also well established law, that it is immaterial whether the omission to communicate a material fact arises from…it not being present to the mind of the assured that the fact was one which it was material to make known”. (12) “The proper question is ‘whether any particular circumstance was in fact material?’ and not whether the party believed it to be so. The contrary doctrine would lead to frequent suppression of information, and it would often be extremely difficult to show that the party neglecting to give the information thought it material (13) ‘The question on such a policy is not whether a certain individual thought.
(11) Zurich General Accident and Liability Insurance Co. Ltd. v. Morrison (1942) 2 K.B. 53 at P.60 C A. (per Mackinnon, L.J.)
(12) Bates v. Hewitt (1867) L.R. 2 O.B. 595 at P. 607.
(13) Lindenau v. Desborough (1828), 8 BAC at P. 592.
a particular fact material, but whether it was in truth material” (14) “The obligation to disclose, therefore necessarily depends upon the knowledge you possess…your opinion of the materiality of that knowledge is of no moment.” (15) “I cannot help thinking that to enable a person proposing an insurance to speculate upon the maximum or minimum of information he is bound to communicate, would be introducing a most dangerous principle into the law of insurance”. (16)v A policy is not bonding if any material fact is not disclosed, and that…is so whether or not the person who does not disclose it knows that it is material, which is sometimes rather hard upon the assured…The question depends upon whether the fact is material or not, and not upon whether the person supposed it to be material. “(17)” it is also well established that these opinion of the assured whether or not a material fact is material is irrelevant. Even if the assured fails to disclose a fact because he does not think it is material when in fact it is, does not avail him”. (18).
(14) Lindenau v. Desborough (1828) 8 B & C 586 at P. 593.
(15) Joel v. Law Union and Crown Insurance Co. (1908) 2 K.B. 863, at P. 884 C.A.
(16) Bates v. Hewitt (1877) L.R. 2 O.B. 595 at P. 608.
(17) Re Yager and Guardian Assurance Co. Ltd. (1913) 108 L.T. 38 at P. 44.
(18) Godfrey v. Britannic Assurance Co. Ltd. (2963) 2 Lloyd’s Rep. 515, C.B. (Life Insurance) at P. 529.
what are the facts which are material has also been discussed in Law of Insurance by Raoul Colinveux Fifth Edition at page 100 on follows:
Everything is material which will guide a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions. (19) In determining the question whether a particular fact is one which ought to be disclosed, the test to be applied is not what the assured thinks. (20) But whether a prudent and experienced insurer would be influenced in his judgment if he know of it. (21) The test is not whether the insurer in question even if he is a prudent one, would have himself been influenced, but whether, applying the standard of the judgment of a prudent insurer, the insurer in question would have been influenced in his judgment. (22)
(19) M.I.A. 1906 ss. 18(2), supra at 5-04, and 20(2) supra at 5-11, N. 72 and in like ^ terms Section 10(5) of the Road Traffic Act, 1934 now Section 149(5) of R.T.A. 1972 infra.
at 20-24 where its relevant terms are set out.
(20) Lindenau v. Desborough (1828) 8 B & C 586 at 592 and at P. 593-.
(21) Lonides v. Fender (1874) L.R. 9 Q.B. 531.
(22) Kerr, J. in Berger v. Pollock (1973) (P) Lloyd’s Rep. 442, 463. There are dicta to suggest that the test is:
what would a reasonable assured consider material? (23)
Not every fact which increases the risk is a material one; there must be a probability that the insurers would attach some importance to it in assessing the premiums. (24)
The Author proceeds to state:
Where as is usual in non-marine insurance, the applicant for insurance is asked to fill in a proposal form containing a list of questions, there is a presumption against him that such questions refer to material facts. (25)
In such a case, the parties are considered to have agreed the difficult question as to what facts are material. (26)….Thus, where a question was asked in a proposal form as to previous refusals to insure by other companies, it was held that the assured was bound to disclose that his last insurer had failed to invite him to renew a policy. (27)
(23)Gibbs C.J. in Durrell v. Bederley (1816) Halt N.P. 283, 286, Swete v. Fairlie (1833) 6 C & P1, Powkes v. Manchester & London (1862) 3 F & F 440.
(24)Dawsons v. Bonnin (1922) 2 A.C. 413 at pp. 2420, 421…
(25) Dawsons Ltd. v. Bonnin 1921 SC 511, 518, Glicksman v. Lancashire andGeneral (1925) 2 K.B. 593, 608 1927 A.C. 139, 140.
(26)Andesson v. Ftogerals (1853) 4 HLC 484, 503, London Assurance v. Mansel (1879) 11Ch D. 363.
(27)Holt’s Motors v. South-East Lanes Insurance (1930) 35 Com. Cas. 281.
The fact that the assured’s answers in a proposal form are true does not prevent the insurer from relying on non-disclosure; the fact that the assured’s answers are literally true will not be enough where in fact they are misleading, incomplete or evasive. (28) The assured generally warrants his answered to be true. (29) In London Assurance v. Mansel at pp. 369-372, but Lord Mansfield’s dictum that where there is warranty nothing need be told. (30) The rule that a warranty does not effect the duty to disclose is now well established, but is not entirely satisfactory as it does not encourage the insurers to draft their questions in clear and unambiguous language. (31)…as is required where they are relying on a breach of warranty and the Courts are slow, therefore, to apply the doctrine of non-disclosure in favour of an insurer where the assured’s answer to his questions are not in fact untrue. Thus where the assured answered a question as to the cost of her car honestly, the fact that a part of that cost was
(28) (See 6-07)
(29) Condogianis v. Guardian (1921) 2 A.C. 125, 131, 132 (P.C.).
(30) Ross. v. Bradshaw (1761) 1 Wm. Bl, 312, Willis v. Poole (1870) 2 Park 935, no longer represents the law.
(31) Lord Wrenbury in Glicksman v. Lencashire & General Assurance (1927) A.C. 139, 144, 145.
made up by the part exchange of another car was held not to be material. (32) And where the assured’s answers have been obviously incomplete, or left blank, the Courts have not necessarily allowed the insurer to bring the doctrine of non disclosure to their aid. (33) In such cases, the insures may be considered to have waived disclosure of the information in question (34) but this will depend on the nature of their questions. Where the assured has put the insurer in a position to obtain the required information no question of non-disclosure can arise (35). The assured is bound not only to make true answers to the questions put to him but also spontaneously to disclose any fact exclusively within his knowledge which it is material fork the insurer to know, (36) nor does the existence of written questions and answers excuse him from answering oral questions truthfully (37) while the presumption is that matters dealt with in the proposal form are material there is no corresponding presumption that matters not so dealt with are not (38) Thus, in Life Insurance cases the fact that the insured warrants his answers in the
(32) Brewtnall v. Cornhill Insurance (1931) 40 LI.LR 166.
(33) Perring v. Marine & General (1859) 2 E & E 317, 324.
(34) Hair v. Prudential Assurance Co. Ltd. (1983) 2 Lloyd’s Rep. 667.
(35) Wheelton v. Hardisty (1857) 7 E & B 232, 269, 270.
(36) Huguenin v. Rayley (1815) 6 Teunt, 186, Wheelton v. Hardisly (1857) 8 E & B 232.
(37) Qurney B. in Wainer Wright v. Bland (1836) 1 M & W 32, 35.
Proposal form only to be true does not mean that he is excused the duty to make full disclosure of all facts material to the risk when he is afterwards questioned by the insurers’ doctor. (39) By not asking questions about a matter, the insurers, do, however, run a greater risk of the contention being pressed home that such matter is not material, (40) and where the insurers ask for information of a specific sort, the proposer is in effect partially relieved from his obligation to disclose all material facts. (41).
19. In the proposal form, Ext. B2, question No. 19 is “Have you been suspected of diabetes or are you suffering from diabetes or have ever passed sugar, albumin, pus, or blood in urine?” and the answer given by the policy holder was ‘no’. There cannot be any doubt that the information required in question No. 19 in Ext. B2 is on a material fact and the answer,
(38) Schoolman v. Hal (1951) 1 Lloyd’s Rep. 139.
(39) Vaughan Williams L.J. in Joel v. Law Union (1908) 2 K.B. 836-863, 876-878.
(40) Scrutton L.J. in Newsholme Bros. v. Road Transport & General (1929) 2. K.B. 356, 362, 363 Me Cormisk v. National Motor & Accident (1934) 40 Com. Cas. 76, 78.
(41) (63) Joel v. Law Union (1980) 2 K.B. 863, 878.
given to that question is definitely a factor which would influence and give a prudent or reasonable insurer in entering into a contract of insurance. There is a presumption that matters dealt with in the form of proposal are material, though some doubt has been expressed on the question whether there is a corresponding presumption that matters dealt with in the form of proposal are material, though some doubt has been expressed on the question whether there is corresponding presumption that matters not so dealt with in the form of proposal would constitute a material fact.
20. As the second policy was called in question before the expiry of two years from which it was affected, neither the first part nor the second part of Section 45 had any application and it would be open to the insurer to repudiate the policy if any material facts contained in the form are inaccurate. It is not necessary for the insurer in such a case to establish that the suppression was fraudulantly made by the policy holder or that the policy holder must have known at the time of making the statement that the statement was false or that it suppressed facts which it was material to disclose. The terms of the policy would clearly show that the statements made as to the state of health of an insured in the proposal form and the personal statement of policy holder were the basis of the contract between the parties and if there was suppression or misrepresentation in regard to the health of the insured, that would vitiate the contract of insurance and would enable the insurer to repudiate the contract.
21. Learned Counsel heavily relied on a Division Bench ruling of the Andhra Pradesh High Court in the Life Insurance Corporation of India, South 2ane, Madras and Anr. v. Bhogadi Chendrevatharma . That is a case, which attract Section 45 and therefore, it has to be distinguished from the facts of this case. Learned Counsel relied on observation contained therein that the confidential reports submitted by the medical examiners of the Corporation will have to be accepted as true, as ordinarily the presumption is that they submitted the reports only after a thorough and careful examination of the proposers in accordance with the questionnaire, unless it is shown by the Corporation that either the Medical Examiner who submitted the report, made a false record or that the proposer made a fraudulent suppression of the material facts being aware of the illness from which he was suffering.
22. D.Ws. 1 and 4, who examined the insured stated that their reports were based on the answers furnished by the insurer to the questionnaire and that if sugar was controlled, the report would not indicate that the person examined was suffering from diabetes. In view of the evidence of D.Ws. 2, 3 and 6 and Exts. XIXII (a), B3, B4 and B6, there cannot be any doubt that the insured was suffering from diabetes and that he had suppressed that material fact in giving answers to the questionnaire contained in the proposal form.
23. Another decision of Andhra Pradesh High Court in New India Assurance Co. Ltd. v. Tembireddi Subba Raghavareddi cited by learned Counsel for respondent is also a case covered by Section 45 and therefore has no application to the facts of this case.
24. Foregoing discussion would show that since the insured has suppressed material facts and made misrepresentation in the proposal form in regard to his health, the insurer is entitled to repudiate the second policy. In the circumstances, in reversal of the part of the Judgment and decree of the Court below, I hold that plaintiff is not entitled to any relief in respect of the second policy, while I confirm the decree passed by the Court below granting a decree in favour of plaintiff in respect of the first policy. Judgment and decree of Court below insofar as it relates to policy 41206371 for Rs. 35, 000/- are set aside.